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Leveraging Intellectual Property: The Value of Harmonized Enforcement Regimes


Heller,  David
MPI for Innovation and Competition, Max Planck Society;

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Gill, A., & Heller, D. (2022). Leveraging Intellectual Property: The Value of Harmonized Enforcement Regimes.

Cite as: https://hdl.handle.net/21.11116/0000-000C-8E68-0
We provide new evidence on how intellectual property (IP) rights support external debt financing by investigating exogenous variation in patent right enforcement. Deploying a unique, large-scale sample of European firms, we exploit the 2004 EU Enforcement Directive, a major legislative change strengthening IP rights across Europe, as identifying event. Results show that firms with valuable patent portfolios disproportionally increase debt financing by about 21%. Effects are particularly pronounced for private SMEs, ex-ante financially constrained firms, and in competitive environments. Adding previously undisclosed patent collateral information provides suggestive evidence that enhanced IP enforcement benefits debt financing beyond a mere collateral channel.